It is, thus, the basis of planning, when a business enterprise makes an attempt to look into the future in a systematic and concentrated way, it may discover certain aspects of its operations requiring special attention. However, it must be recognised that the process of forecasting involves an element of guesswork and the managers cannot stay satisfied and relaxed after having prepared a forecast.
The forecast will have to be constantly monitored and revised—particularly when it relates to a long- term period. The managers should try to reduce the element of guesswork in preparing forecasts by collecting the relevant data using the scientific techniques of analysis and inference.
On the basis of the definition, the following features of forecasting can be identified:
- Forecasting relates to future events.
- Forecasting is needed for planning process because it devises the future course of action.
- It defines the probability of happening of future events. Therefore, the happening of future events can be precise only to a certain extent.
- Forecasting is made by analysing the past and present factors which are relevant for the functioning of an organisation.
- The analysis of various factors may require the use of statistical and mathematical tools and techniques.